Thailand’s expanding solar ambitions

Having positioned the country as a key emerging solar market, Thailand’s government is now moving into the rooftop solar sector and looking at ways of exporting solar expertise to other countries. Graham Anderson reports from Bangkok

When Thailand’s government announced major plans to boost the country’s solar rooftop market last month, it was just another stage in its long battle to establish itself as a regional leader in renewable energy, and the solar sector in particular.

The principle of supporting renewable energy has been accepted by successive Bangkok administrations for more than two decades, although like many countries, Thailand has been struggling with the problems of developing coherent and consistent solar energy policies.

Fast-developing technologies, the rapidly falling prices of photovoltaic panels and unstable supply chains – all against the backdrop of the global economic crash – have meant that government and corporate strategies around the world have changed almost daily. And when the political upheavals within Thailand itself are added into the mix – reaching a peak with the 2006 military coup which ousted the government of the then Prime Minister Thaksin Shinawatra – it is hardly surprising that implementation of policies to support and develop the solar sector has been uneven.

Even today, the ministers in Prime Minister Yingluck Shinawatra’s current administration are concerned that an over-commitment to renewable energy will see consumer electricity prices rise sharply. But despite all the caveats, the logic for Thailand of boosting its commitment to renewable energy is inescapable.

Conergy’s PV plant at Ayutthaya is one of the large-scale projects contributing to Thailand’s 400MW of solar capacity. Source: Conergy

There are large deposits of natural gas in the Gulf of Thailand, yet the country imports almost 70% of its energy needs, and with electricity demand rising in a growing economy, that percentage is not going to fall. In addition, with fossil fuel prices rising ever higher and increasing resource competition from other fast-growing economies in the region, that state of affairs is economically risky, if not unsustainable.

Hence the continually growing interest in renewables and the fact that today Thailand is regarded as a regional leader in solar energy. And as other ASEAN and neighbouring states look to follow its example, Thailand’s solar sector is discovering that its expertise is an increasingly desirable, and exportable, asset. The Thai solar energy sector is also attracting growing international attention from manufacturers, developers and financial institutions, both as a market in its own right, and as a platform for expansion across the Asia Pacific region.

Solar: tried and tested

One of the major financial backers of solar energy projects in Thailand is the Kasikorn Bank, which has long has a strategy of becoming a leader in the environmental sector. “We are very optimistic about the solar market here,” first vice president Kasemsri Charoensiddhi tells Solar Business Focus from the company headquarters in Bangkok. “In the domestic and rooftop sector, we believe there is a huge opportunity for our retail arm. And in the large-scale sector, we also think there is considerable scope for further growth.”

That optimism is voiced despite what the bank believes is a temporary slowdown in the large-scale sector. Last year, the government quadrupled its target for large-scale solar development to 2000MW by 2020, up from 500MW set in 2008.

It split this target equally between PV and solar thermal. The government received so many applications for power purchase agreements that it has said it will not be accepting any more for the moment.

However, the declining cost of PV has meant that solar thermal developers have been reluctant to go ahead. In turn, the government has refused to let those with solar thermal power purchase agreements turn them into PV projects, saying that the solar thermal contracts will have to be honoured as they are, or scrapped and the process restarted.

The upshot is that the Thai PV sector is optimistic the government will have to give the go-ahead for more PV projects over and above the original 1000MW PV target if it is to get near to the numbers in its alternative energy plan.

The Ministry of Energy is reported to be looking at increasing its coal-fired power output and also expanding the number of biomass plants through the use of napier grass. But Kasikon Bank is convinced the government will conclude that solar is the best option.

“Solar in Thailand is tried and tested. All of our projects – all of them – have outperformed expectations,” Charoensiddhi says. She should know what she is talking about: developer SPCG has already completed 28 projects totalling 168MW, with six more in the pipeline, all of which have support from Kasikorn Bank.

Exporting solar expertise

The growth of Thailand’s solar sector led to the creation last year of the Thai Photovoltaic Industries Association. Its first chairman is Dusit Kruangam, managing director of the Bangkok-based EPC, Thai Solar Futures. He is also an advisor to the developer SPCG.

The association has quickly identified the international opportunities afforded by Thailand’s experience to date.

“One of the objectives of the association is to help the industry here work internationally,” Kruangam tells Solar Business Focus. “Installed capacity in Thailand is currently 400MW, and we expect that to be 1000MW by 2015, plus the rooftop capacity on top of that. Beyond that, the development of future solar farms will depend on government policy; at this point we do not know exactly how the government will support them. As a result a lot of Thai companies are already going abroad to start companies, for example in Myanmar, Laos and Cambodia.”

About Myanmar, Dusit adds that the potential is considerable: “It is not too early to go there. There are 60 million people, it is close to Thailand, but only 15% of the population is on grid, and even in the cities the electricity supply is not stable and power cuts are common.”

Another Thai company looking overseas is Leonics, an electronics firm specialising in control systems for the power industry. Historically, the solar sector has been a relatively small part of its business, but it is growing so fast that the company now also works as an EPC, and has almost tripled its turnover.

Managing director Wuthipong Suponthana is also one of the founders of the Thai Solar Club, an informal grouping comprising government, manufacturers, developers and investors that meets to discuss critical issues facing the sector.

At the end of last year, Leonics completed and commissioned two stand-alone PV/mini-grid hybrid systems of 3.3MW and 4.2MW respectively in the Perak and Sabah regions (CHK) in Malaysia.

Two further systems of 3.4MW and 4.9MW, one more in Sabah and the other in Sarawak, are scheduled to be commissioned at the end of this month. The whole project is funded by the Malaysian government to help boost the local economies of remote areas. These hybrid systems are intended for remote off-grid locations. They generate power from a PV array so reducing diesel consumption while maintaining continuous supply.

“We work on all sorts of projects, from big to small. There is huge potential for the solar sector in Thailand and in all of Southeast Asia,” says Suponthana. “In Thailand the market is grid-connected; the off-grid and mini-grid market is very small. Elsewhere in Southeast Asia the market has in the past consisted of small projects, but now we are seeing solar farm projects beginning to come through in Indonesia and the Philippines, as well as in Malaysia.”

However, Suponthana’s optimism is tempered by the fear that Thailand is missing the opportunity to develop a solar energy industry of its own. He does not want to see import tariffs, as that would potentially damage the industry’s prospects. He feels that other countries have looked at Thailand’s experience and are learning the lessons – creating a second mover advantage, as it were.

“When you give incentives, such as a feed-in tariff, you create a market, but we need the government to help create jobs,” he says. “For example, they could institute a policy of using local products. In Malaysia, you can use any type of equipment, but if you use local equipment you get a bigger adder [tariff].”

He adds: “I hope the government can find a way to give the industry some support. We do not need much, and it is not too late, we just need a little incentive. We should have our own solar energy industry, and not reply on overseas countries.”

However the Thai industry develops, the whole region looks set to be one of the most exciting and fast moving solar markets in the world. Watch this space.

Raising the roof

Thai energy minister Pongsak Ruktapongpisal has said that full details of the government’s new rooftop solar policies will be published very soon. The government hopes it will lead to a major expansion of the country’s solar rooftop sector on both domestic and commercial buildings.

Until now there has been no rooftop solar policy in place in Thailand, either for large commercial and public buildings or the domestic sector. Now a working group has been tasked with producing a financial framework covering a feed-in tariff and other supporting measures.

The group is also expected to recommend the abolition of current restrictive regulations that require home or office wishing to install solar panels to apply for licences from the government’s Industrial Works Department.

Sources say the government is proposing to support the installation of 100,000 3KW domestic rooftop systems and 1,000 500KW commercial systems.

The total capacity installed is expected to be approximately 800MW.

Dusit Kruangam, the chairman of the Thai Photovoltaic Industries Association, tells Solar Business Focus that the policy is a significant step forward: “We are convinced that a lot of home owners would like to participate in the solar energy sector.”

Rumours of an announcement have been circulating for months and some companies have been positioning themselves to take advantage of the move. Developer SPCG has recently set up a new company called the Solar Power Roof Company specifically to focus on the Thai domestic market, using Kyocera solar modules.

It has also taken out advertisements in both Thai and English in local newspapers calling for 1,000 members of the public to put themselves forward as ‘solar roof ambassadors’ to help spread the word.

The ambassadors receive discounts on equipment and installation, a free remote monitoring kit and will be given the right to purchase IPO shares if the SPCG subsidiary, Solar Power Roof Company, is listed on the Thai Stock Exchange – a move that has already been discussed as a future option.

Find out more

A detailed study of the solar energy market in the ASEAN region will be the focus of a new conference taking place on December 3 and 4 at the Impact Convention Centre in Bangkok.

The event is organised by Solar Media, the publisher of Solar Business Focus and the PV-Tech website, and speakers will include:

HE Pongsak Ruktapongpisal, minister of energy, Thailand (invited and accepted in principle)